I’m in Brussels today, for another EU Commission workshop. This time, the goal is to get the more successful European social networks and others in industry into one room to talk about innovation and research, and do some matchmaking. Mind you, th…

I’m in Brussels today, for another EU Commission workshop. This time, the goal is to get the more successful European social networks and others in industry into one room to talk about innovation and research, and do some matchmaking.

Mind you, the commission facilities at 25 avenue Beaulieu aren’t the best dating site, and many here are making it unnecessarily difficult — folks, if you go to an event like this, make sure your e-mail address and twitter account is on every single slide you show, and make sure you pack lots of business cards!

Still, the event is useful, and some common themes are emerging from social network providers’ presentations:

Regulation as a disproportionally heavy competitive disadvantage. Europeans will go to US social networking sites that don’t comply with European ideas and laws about privacy; social network providers in Europe struggle to comply, and struggle to develop competitive business models.

Without going into the details of how that mixes with privacy, many of the social networks that presented this morning based their business models on targeted advertising, often with US-based advertising partners.

Some (like XING) are trying to move away from the advertising model. In XING’s case, 80% of the revenue comes from subscribers and recruiters that use the service.

Most of the networks that presented here were directly linked to a natural or cultural identity. They typically focused on few countries; several of the largest ones are invitation-only, i.e., you need to be asked by an existing friend to join.

The constant subtext is that not just are they unable to compete with Facebook: It’s unlikely that Europe’s regulatory culture would have permitted a social network of the same popularity to thrive.

Striking, then, the short presentation in the afternoon by Zed Group, a digital entertainment and social gaming company: Time to market and global reach mean that country and culture specific social networks don’t cut it for them as a delivery mechanism — they’re going with Facebook right away.

What does this mean for Europe’s social network providers?

They might be able to survive in a national niche, serving the business needs of a telecom operator or publishing house that provides the requisite financial backing. They might end up as a Facebook or Google application. But in the current environment it’s unlikely that they’ll benefit from the global network effects that the Googles and Facebooks can leverage when they sell advertising, or serve as identity provider, or mine data to build new services.

Mining data is one of the concerns that the commission’s Stefano Bertolo brought up early in the day: Large social networks and large numbers of interactions imply an incredible scale in the data that can be used to train advanced algorithms, and that can serve to build innovative services. As those data are collected in the US, Europe’s research landscape suffers what might become a serious competitive disadvantage.

How can we collectively solve the problem, then? The commission is certainly doing the right thing in trying to bring the social networks together, and in trying to bring them into the Framework Program, and getting them to collaborate with other players in Europe. Yet, the framework program’s culture doesn’t necessarily match the sort of environment a startup wants to play in.

Looking at the big picture, though, the small players in this space need to find their own way to enable and benefit from network effects; as an aside, even the Facebooks and Googles will have a long-term interest in having a healthy and diverse Social Web ecosystem that they compete within. Key elements of that ecosystem will be:

A shared vision toward user privacy. Yes, many business models in this space are built on targeted advertising. Yes, some targeted advertising might be socially worrisome. But how meaningful is privacy (and child and youth protection) regulation when it will simply make US players dominant, even in the European market? This problem is hard.

Web Identity. An interoperable identity layer for the Web will enable more services to occur as identity providers, and will enable a broader set of applications to be built on top of social networks.

Advertising standards, perhaps. One of the interesting requests brought up by several speakers at the conference today was toward shared advertising standards — both to package ads, and to express user preferences and enable better ad targeting.

Federation of social Web transactions. The W3C Social Web Incubator Group has spent the last year surveying the space. The group is now working on another incubator that looks specifically at the federation use cases. If you’re interested in participating in this work, take a look at the Federated Social Web draft charter.

The big picture here is to enable the plethora of small-ish social networks to be able to serve as a shared social layer for both users and applications (that includes advertising, I suppose), at scale, while continuing to differentiate based on culture and target group and language and country and whatever else they’re differentiating on today.